"If nobody's doing it, why can't I?"--Frankie Van Cleave, one of two Atlanta housewives who run a private garbage collection firm.

Libertarians see local government intervention into provision of solid waste services as producing increased costs and stifling development of recycling alternatives. Municipal garbage collection costs an average of 68% more than even semi-private government contract collection. Substantial local government subsidies to the operation of sanitary landfills reduce the ability of recyclers to compete.

Libertarians will abolish local government franchises and contracts with garbage collection firms, and municipal garbage collection departments will be required to go to their customers directly and on a voluntary basis, or be sold piecemeal.  Municipal landfills will also be sold.

     As long as solid waste collection and disposal is dominated by the presence of one alternative--a system of collection and dumping at a spot provided by local government--it seems fated to remain a fairly standardized activity.  Accordingly, knowledgeable observers perked up their ears when Columbia University researchers claimed to have identified the kind of situation in which garbage collection is most efficiently performed:  a market of 50,000 people served by one collector on a contract basis.
     The striking fact is that government intervention has rather consistently prevented this ideal from being achieved.  Private garbage collection firms are discouraged from organizing in this fashion; and municipalized operations corrupt the ideal with add-o costs peculiar to politically-run organizations.

The Effect of Intervention

     Where private garbage collection firms have been permitted to trade directly with their customers--without benefit of exclusive franchises or government contract--regulators have taken the attitude that private firms should be discouraged from setting up the regional and (in a large city) neighborhood mergers which would serve the consumer most efficiently. District attorneys crusade against "collusion" little realizing that they are driving up private garbage collection costs.2  And, of course, where a market of 50,000 can only be reached by crossing local government jurisdictional lines, the preference which one government expresses for "its" local collectors often prevents private collectors in a nearby district from   providing the best service to the area as a whole.3
     So "private" garbage collection, as the industry itself speaks of it, has come to stand for a madhouse of small outfits operating overlapping routes with excessive investment, low profitability, and high costs. The Columbia study found that such "private" operations--regulated as they are by public policy--were 34% more costly than having the optimal 50,000-population area served by one operator.4  This is a not altogether surprising conclusion. But in no way is it the true picture of the free market, where private garbage collectors would not be prevented by political pressures and control from establishing the kind of operations which consumers most reward.
     Some garbage collectors have been permitted to serve markets in the 50,000-population range (and larger)--but generally only under city franchise, city contract, or as a unit of the municipal government itself.  All of these arrangements adulterate and ultimately eliminate the economies of large-scale operation by tacking on costs peculiar to political control.  "Private" franchisees and contract operators must pay their dues, figuratively and literally, to the politicians who call the shots.  The consumer loses a valuable free market right under government franchise or government contract garbage collection: the right to patronize the collector of his choice.  If the large firms serving 50,000 customers on an annual contract basis are, as the Columbia study suggests, the most efficient form of garbage collection service, then this amounts to a competitive advantage.  The free market itself would establish such firms; no governmental favors or coercion are needed.  Better to leave the political middlemen at the dump.
     Municipal collection is, as one might expect, the most costly of all.  Stronger political direction, politically influential employees, and the absence of any profit motive add up to large costs which are tagged onto the garbage collection bill.  It could only be coincidence, that a municipality's jurisdiction turned out to be the most efficient possible size for one garbage collection organization to serve.  We can merely surmise what the full additional cost of municipal collection is compared to the true free market alternatives, but even a comparison with "private" contract collection is suggestive.  It costs the average municipal agency 68% more than it costs the average contract firm to provide twice-a-week curbside collection service.5  The accompanying table shows why. 





Average Crew 
Served Per
Time Spent
Each Household
per year)
% Organizations
Having Labor
Incentive Systems
Average Truck
(Cubic yards)

Source: Emmanuel S. Sawas, Evaluating the Organization of Service Delivery:  Solid Waste Collection and Disposal (New York:  Columbia University Graduate School of Business, Center for Government Studies, October 1975), pp. vi-vii.

     According to Leonard Stefanelli, president of Sunset Scavenger Corporation, one of two companies under city contract to pick up San Francisco garbage, "The difference between Civil Service and our operation is the eight-hour day.  Our men are guaranteed eight hours' pay, but if they can do the job in six hours, they can go home."  Leo Conte, the head of Golden Gate Disposal Company, the other San Francisco contract hauler, employs the same work-at-your-own-pace setup, and he confirms that, rather than stretch the job to fill eight hours, his employees actually run at the job...They have a route to cover, and the faster they can cover it, the earlier they can quit."6
Similarly, a 1971 New York City study discovered that private collectors could pick up garbage at $17.50 per ton compared with the city's $49 per ton.  The City Sanitation Department spent $207 a year to collect garbage twice a week from each household in an area of single family homes in Little Neck and Douglaston, Queens.  In Bellerose--a similar neighborhood three miles away over the Nassau County line--a private firm collected residential garbage three times weekly for just $72.7

Local Government and Garbage

     These facts, then, stand out about garbage collection: Though the optimal collection firm may be a regional or (in large cities) neighborhood "monopoly," garbage collection remains nonetheless a highly competitive businesses,8 and every established firm would be, on the free market, acutely aware that customers can easily be wooed away by new entrants.  But government regulation and jurisdictional differences have kept existing private operators from servicing markets of efficient size, thus raising their costs and blunting their competitive impact.  Where private firms have been allowed to serve larger markets, it has usually been under government franchise or municipal contract.
     * Government has fostered a coercive, costly garbage monopoly into which many "private" operators have been co-opted.
     * Many governments have blatantly appropriated the garbage monopoly for themselves, burdening the consumer and taxpayer with still further costs.
     * Finally, as we shall see, governments have crippled the development of recycling.

Sanitary Landfills: the Only Alternative?

     The assumption that garbage collection is best organized as a neighborhood or regional "monopoly" comes in for further critical examination once we consider the role of tax-subsidized municipal "dumps."  Though solid waste contains many potential resources and enjoys many potential markets, it goes to one kind of collection firm, and the garbage trucks go to one kind of destination: the city dump. Were taxes to stop subsidizing this setup, we might expect to see several changes in solid waste economics.
     For instance, recyclers would presumably benefit from not having to compete with subsidized competition.  Their trucks would compete with landfill-bound garbage trucks for householders' refuse--simultaneously ameliorating the effects of neighborhood garbage "monopolies" by making possible yet another substitute service.  The "duplicating" routes resulting from competition between different kinds of solid waste disposal do not necessarily spell higher costs for the consumer, for recyclers could apply income gained from scrap sales against any extra cost of additional routes. Even if recycling service proved to be more expensive, customers might find the extra cost worthwhile. Lastly, should compartmentalized garbage trucks become feasible as various solid waste "destinations" compete for garbage, further competition and consumer savings could come into reality.
     The tax-subsidized sanitary landfill stands in the way of all of this.  A host of federal government policies--environmental laws, public land policies, Interstate Commerce Commission rate-making, and income tax differentials--also militate against the development of specialized solid waste disposal and recovery.  But the big offender is the local government dumping subsidy: 58% of counties use the general fund as the main source of capital funds for landfills; revenue sharing monies are used in 35% of the cases, and general obligation or revenue bonds in 22%.  Operating expenditures of landfills are subsidized by general tax revenues in 56% of the counties.9
     Despite this obstacle, recycling continues to move forward. Traditional industrial markets for bulk wastes have expanded to include the use of heavy paper, cardboard, and tires to fire steam heating plants; General Motors has shaved $1 million off the heating bill at its Pontiac, Michigan plant with one such project.10  Garbage is being scavenged for natural gas, crude oil, livestock feed, and minerals.  And recycling businesses which rely either on limited home-separation of recyclables or drive-in recycling centers can, in the words of one Los Angles recycler, be "very effective and very profitable."11  But as long as most solid goes to a site where it is randomly mixed with incompatible elements, it will remain next to useless--instead of the valuable resource it could be.

Libertarian Proposals

     What will Libertarians do about solid waste?
     * Libertarians will institute a free market to replace government garbage monopolies.  Franchise and government contract operators will seek service agreements directly with their customers.  Municipal departments will be disbanded and sold--in whole or in part--to private operators.  At last, people will be free of paying the extra burden which political interference places on garbage service.  At last, people will be free to choose as they wish from among a free market of firms competing for their patronage.
     * Libertarians will sell the dump. Government-owned sanitary landfills and other assorted disposal schemes will be sold. Depending upon the existing situation, this may or may not have the effect of increasing the costs landfill users pay.  (Taxpayers, in any event, will directly benefit when landfill subsidy savings are passed through as tax cuts.)  With the development of free market alternatives to traditional landfills and government-supported garbage collection monopolies, the household customer can look forward to greater value for his or her dollar.



1. Evaluating the Organization of Service Delivery: Solid Waste Collection and Disposal, Emmanuel S. Savas, Center for Government Studies, Graduate School of Business, Columbia University, October 1975; pp. v-ix. This study is forthcoming soon in book form. Cf. Robert W. Poole, Jr., Cut Local Taxes (Santa Barbara, CA: Reason Press, 1976) pp. 18-22.
2. "Public vs. Private Collection of Refuse: In Some Cities, It's No Longer a Debate," The New York Times, July 10, 1975.
3. The Savas study found that "...if three adjacent communities of 3,000 people each--with separate collection systems of average cost--are organized into a single refuse collection market of 9,000 population, the cost per household can be expected to decline by 13%. If three communities of 10,000 people each combine to form a unit of 30,000 population for refuse collection purposes, the cost per household can be expected to decline 9.5%." (Savas, p. viii.)
4. Savas, op. cit., p. v.
5. Savas, op. cit., p. vi. It is also noted that the cost which appears in the average municipal budget for municipal garbage collection is, as determined by on-site data collection using a standard cost structure, understated by an average of 18%.
6. "Public vs. Private Collection," New York Times, July 10,1975.
7. Ibid.
8. Take, for example, Atlanta's Backyard Team, Inc., which was founded by two housewives with one used compacter truck, a college student driver, and an office--and now makes $10,000-$20,000 annually by underselling the city garbage collectors by $50, to 300 customers.
See "Making Garbage Pay Off," Conservative Digest, (June 1976) p. 46.
9. Savas, op. cit., pp. xv-xvi.
10. William D. Burt, "Trash for Money," AREA Bulletin (March-April 1977) p. 5.
11.  Ibid. See also "Private Hauler Profits from Providing Separate Collection Service to Local Homeowners," Solid Wastes Management (February 1977) p. 14.

Chapter 5
Table of Contents